Discuss the payback period and accounting rate of return

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A company is considering purchasing a machine for $25,000. The machine will generate an annual after-tax net income of $3,000 per year. There is a salvage value of $1,000. The company uses straight-line depreciation.

Required: Determine the payback period and accounting rate of return. You must show all computations, formulas used, and round answers to nearest two decimal places.

Reference no: EM131781977

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